Published by NBC News | May 22, 2021
In some neighborhoods, competition is so fierce that many homes are sold before they even hit the market.
The number of existing home sales plunged in April, surprising economists who had expected last month’s drop to moderate. Real estate experts say this is an indication that shortages of everything from lumber to kitchen appliances are reverberating throughout an already red-hot market — good news for sellers, but a situation that threatens to price out a growing number of buyers, despite mortgage rates that remain near historic lows.
Existing home sales fell from an annualized 6.01 million to 5.85 million, the National Association of Realtors said recently. The consensus had been for a tiny uptick to 6.02 million.
The plunge can be attributed to a lack of inventory, said Nick Bailey, chief customer officer at RE/MAX. It’s a perfect storm for home buyers: Builders are contending with widespread and unprecedented supply chain choke points just as the swelling population of millennials is seeking to transition into larger homes to accommodate families.
“It’s the millennial population driving this market,” Bailey said. “A lot of them are turning to new construction, but because of labor and supply costs, builders are being very deliberate about how quickly or how slowly they bring things onto the market.” The lumber shortage has been well-documented, but there are a host of other supply chain choke points plaguing home builders, from copper for wiring to PVC pipe — even for often taken-for-granted inputs like kitchen appliances.
This combination of factors means that last year’s sharp escalation of home prices is set to continue. According to the National Association of Realtors, the median sales price on an existing-single-family home hit a record $334,500 in March.